PHILANDER SMITH COLLEGE

Finding 2024-004 - U.S. Department of Education (Title IV Student Financial Aid Programs - Failure to Reconcile Title IV Programs (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.24 (a), institutions must maintain records necessary to demonstrate compliance with the requirements of Title IV of the Higher Education Act (HEA) programs, including records that support the accuracy of disbursements and fiscal transactions. Per the Federal Student Aid Handbook, Volume 4 – Processing Aid and Managing Funds, institutions are required to reconcile internal disbursement and expenditure records with the Business Office, general ledger, and the Department of Education’s systems (COD, G5, etc.) on a monthly basis for all Title IV programs. Additionally, for Federal Direct Loans specifically, per 34 CFR § 685.300(b)(5), institutions must reconcile the institution’s Federal Direct Loan records with the Department’s records at least monthly and resolve any discrepancies Condition – The College did not perform required reconciliations between the Office of Financial Aid and the Business Office for the following Title IV programs during the audit period: • Federal Pell Grant Program • Federal Direct Student Loans • Federal Supplemental Educational Opportunity Grant (FSEOG) • Federal Work-Study (FWS) Program As a result, disbursement records maintained by the Office of Financial Aid did not reconcile to the general ledger or COD for any of the programs reviewed. No documentation of monthly or year-end reconciliations was provided for audit examination. Cause – The lack of reconciliation appears to have resulted from insufficient coordination and timeliness between the Office of Financial Aid and the Business Office Effect - Failure to reconcile may impact the University’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory review, questioned costs, and potential repayment liability. There is also an increased risk of overpayments or underpayments of federal aid and misstatements in the Schedule of Expenditures of Federal Awards (SEFA) and general ledger. Questioned Costs - $63,823 Perspective – Reconciliation is a foundational internal control for Title IV program administration. The failure to reconcile across all four major programs indicates a systemic, not isolated, weakness in financial aid and accounting oversight. Repeat Finding – Yes. Auditor’s Recommendation - The University should implement monthly reconciliations, strengthen cross-department coordination, perform year-end reconciliation prior to FISAP submission. Implementation of these measures will help ensure compliance with federal regulations, reduce financial reporting risk, and reinforce the University’s administrative capability. Management’s Response – Management is working to implement standardized workflows and periodic internal monitoring between the Office of Financial Aid and the Business Office. View of Responsible Officials – Management agrees with the finding and acknowledges the failure to perform timely and documented reconciliations of Title IV programs during the audit period. Management concurs with the auditor's assessment that reconciliation is a critical internal control and recognizes the need to strengthen coordination, documentation, and timeliness between the Office of Financial Aid and the Business Office.

Finding 2024-005 - U.S. Department of Education (Title IV Student Financial Aid Programs - Unreconciled Expenditures Reported on the FISAP (material weakness): Information on the federal program – Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.24 (a), institutions must maintain records necessary to demonstrate compliance with the requirements of Title IV programs, including records that support the accuracy of disbursements and fiscal transactions. Per the Federal Student Aid Handbook, Volume 4 – Processing Aid and Managing Funds, institutions are required to reconcile internal disbursement and expenditure records with the Business Office, general ledger, and the Department of Education’s systems on a monthly basis for all Title IV programs prior to completing year-end federal reporting including the FISAP. Condition – The Office of Financial Aid submitted unreconciled expenditure amounts in the institution’s Fiscal Operations Report and Application to Participate (FISAP). At the time of audit, the reported FISAP totals did not reconcile to the applicable federal systems (COD) or to the Student Financial Aid (SFA) reconciliation report. No documentation was provided to demonstrate that final reconciliations were completed prior to submission of the FISAP. Cause – The lack of reconciliation appears to have resulted from insufficient coordination and reconciliation timeliness between the Office of Financial Aid and the Business Office Effect - Failure to reconcile may impact the University’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory review, questioned costs, and potential repayment liability. The accuracy and reliability of the FISAP submission cannot be assured. Questioned Costs - $0 Perspective – The FISAP serves as a primary financial reporting tool used by the Department of Education to determine campus-based program funding and institutional compliance. Submitting unreconciled figures undermines the integrity of federal reporting and represents a systemic breakdown in financial oversight rather than an isolated reporting error. The Office of Financial Aid submitted unreconciled expenditures within the Fiscal Operations Report and Application to Participate (FISAP) for the programs below: a. Federal Pell Grant Program b. Federal Work Study (FWS) Program Repeat Finding - Yes Auditor’s Recommendation - The University should implement monthly reconciliations, strengthen cross-department coordination, perform year-end reconciliation prior to FISAP submission. Implementation of these measures will strengthen financial accountability, improve federal reporting accuracy, and reduce the likelihood of future findings. Management’s Response – To address this finding and prevent recurrence, the University has strengthened its reconciliation and reporting processes by implementing mandatory monthly reconciliations for all Title IV programs and requiring completion of a documented year-end reconciliation prior to submission of the FISAP. The Office of Financial Aid now utilizes standardized reconciliation templates and documentation procedures and coordinates closely with the Business Office to ensure reported expenditures reconcile to internal records, the general ledger, and federal systems. In addition, supervisory review has been incorporated into the reconciliation and FISAP preparation process to verify accuracy, resolve discrepancies timely, and ensure federal reporting is complete, accurate, and supported by reconciliation documentation. View of Responsible Officials – Management agrees with the finding and acknowledges the submission of unreconciled expenditure data within the Fiscal Operations Report and Application to Participate (FISAP). Management concurs that all Title IV expenditures must be fully reconciled to internal records, federal systems, and the general ledger prior to year-end federal reporting to ensure accuracy and compliance with federal requirements.

Finding 2024-006 - U.S. Department of Education (Title IV Student Financial Aid Programs - Untimely Return of Title IV Funds (material weakness): Information on the federal program – Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.22 (j), (1) institutions must return the amount of Title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution’s determination that the student withdrew. Condition – During our review of the Return of Title IV Funds (R2T4) calculations, we identified one (1) student for whom the University did not return unearned Title IV funds within the required 45-day timeframe. The funds were not returned until 471 days after the University’s date of determination (DOD), significantly exceeding the regulatory deadline. Cause – The late return appears to have resulted from lack of monitoring procedures for outstanding R2T4 returns and inadequate coordination between the Financial Aid Office and the Business Office. Effect - The University was not in compliance with federal R2T4 return requirements. Untimely returns reflect weaknesses in the University’s internal control over Title IV administration and may affect administrative capability under 34 CFR § 668.16. Questioned Costs - $0 Perspective – Returning unearned Title IV funds within 45 days is a core compliance requirement. Institutions must demonstrate the ability to promptly identify withdrawals, calculate R2T4 amounts, and process returns to maintain eligibility for participation in Title IV programs. Repeat Finding - Yes Auditor’s Recommendation - The University should implement a formal R2T4 tracking system and strengthen coordination between departments. Management’s Response – Management is working to implement standardized workflows and periodic internal monitoring. View of Responsible Officials – Management agrees with the finding and concurs that the return of unearned Title IV funds must occur within the required regulatory time frame. The University recognizes the importance of timely Return of Title IV processing and is committed to strengthening internal controls, oversight, and coordination to ensure future compliance.

Finding 2024-007 - U.S. Department of Education (Title IV Student Financial Aid Programs - Inconsistent Cost of Attendance (COA) Budgets (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.16(f), institutions must ensure that policies and procedures are administered consistently and that all required student eligibility and financial aid determinations are made accurately. Per 34 CFR § 668.2 and § 668.72, institutions must use COA components that are reasonable, compliant with statutory definitions, and applied consistently to all students within similar categories. The Federal Student Aid Handbook, Volume 3 - Calculating Awards, further requires institutions to apply the cost of attendance components uniformly to students in the same category and maintain documentation supporting all COA amounts used in packaging. Condition – During testing of student financial aid files, we noted that while the College provided official cost of attendance (COA) budgets, twelve (12) out of sixty (60) students tested had COA budgets that were not consistent with the COA budgets approved and published by the University. Cause – The inconsistencies appear to have resulted, in part, from the University not updating its cost of attendance budget tables within the student information system or did not communicate COA updates across departments leading to outdated or incorrect COA components being applied during packaging. Effect - Inconsistent COA application indicates weaknesses in the University’s internal controls and may affect its compliance with the administrative capability requirements under 34 CFR § 668.16. Questioned Costs - $0 Perspective – COA inconsistencies weaken the accuracy of all aid calculations and raise concerns regarding the school’s overall financial aid administration and quality assurance processes. Repeat Finding - No Auditor’s Recommendation - Implement a formal process ensuring COA components are applied consistently for all students within the same category Management’s Response – Management is working to implement standardized workflows and periodic internal monitoring. The University has also enhanced system controls. View of Responsible Officials – Management agrees with the finding and acknowledges that Cost of Attendance budgets were not applied consistently across similarly situated students. The University recognizes the importance of uniform COA application and adequate documentation to ensure accurate financial aid determinations and compliance with federal regulations and is committed to implementing corrective measures to address this issue.

Finding 2024-008 - U.S. Department of Education (Title IV Student Financial Aid Programs - Untimely Release of Title IV Credit Balances (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.164 (h)(1)-(2), institutions must Pay a Title IV credit balance to the student (or parent for a PLUS Loan) no later than 14 calendar days after the balance occurs Condition – During testing of student account activity, we identified that seven (7) out of sixty (60) sampled students had Title IV–created credit balances that remained on their accounts for more than 14 days without being released to the student or parent. Cause – The delays appear to have resulted from insufficient monitoring of aged credit balances on student accounts. Effect – Holding Title IV funds beyond 14 days impact the institution’s administrative capability under 34 CFR § 668.16, exposing the College to regulatory findings and required corrective action. Questioned Costs - $0 Perspective – Timely release of Title IV credit balances is one of the Department of Education’s most frequently tested compliance areas. A failure rate of 11.7% (7 out of 60 students) indicates a systemic weakness, not isolated oversight. Repeat Finding - Yes Auditor’s Recommendation - The University should implement weekly monitoring of credit balances, improve coordination between departments, and establish system alerts or automated processes. Management’s Response – Management has enhanced system controls and implemented periodic internal monitoring. View of Responsible Officials – Management agrees with the finding and acknowledges that the identified condition resulted from the system not pulling credit balances per semester.

Finding 2024-009 - U.S. Department of Education (Title IV Student Financial Aid Programs - Failure to Document High School Completion for Title IV Eligibility (material weakness) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Under Higher Education Act (HEA) § 484(d), a student must possess a high school diploma or its recognized equivalent, or meet an allowable alternative eligibility standard, to receive Title IV federal student aid. Per 34 CFR § 668.32(e), a student is eligible to receive Title IV funds only if the institution has documentation showing that the student has a high school diploma or recognized equivalent, or has completed homeschooling, or meets the requirements for Ability-to-Benefit (ATB). Condition – During testing of student eligibility, we noted that four (4) out of sixty (60) sampled students did not have documentation of high school completion or its recognized equivalent (e.g., high school transcript, diploma, or GED certificate) in their student files. Despite the absence of proof of high school completion, the students were enrolled and awarded Title IV federal student aid. Cause – The exception appears to have resulted from failure to collect or retain required documentation at the time of admission or prior to awarding aid and lack of a systematic verification checkpoint to confirm high school completion before packaging Title IV awards. Effect - Noncompliance may impact the University’s administrative capability under 34 CFR § 668.16, exposing the College to inaccurate reporting and potential repayment liability. Questioned Costs - $53,932 Perspective – High school completion documentation is one of the fundamental eligibility requirements for Title IV aid. A failure rate of 6.6% (4 of 60 students) demonstrate a systemic deficiency, not isolated oversight. Repeat Finding – Yes. Auditor’s Recommendation - The University should implement a mandatory eligibility verification process and strengthen document collection and retention controls. Management’s Response – Management has implemented standardized checklists and workflows, added secondary review, enhanced system controls, and implemented periodic internal monitoring. View of Responsible Officials – Management agrees with the finding and acknowledges that required documentation of high school completion or an allowable alternative was not consistently maintained in student files prior to the disbursement of Title IV federal student aid.

Finding 2024-010 - U.S. Department of Education (Title IV Student Financial Aid Programs - Missing Official Transfer Transcripts to Establish Title IV Eligibility (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Under Higher Education Act (HEA) § 484(d), a student must possess a high school diploma or its recognized equivalent, or meet an allowable alternative eligibility standard, to receive Title IV federal student aid. Per 34 CFR § 668.32(e), a student is eligible to receive Title IV funds only if the University has documentation showing that the student has a high school diploma or recognized equivalent, or has completed homeschooling, or meets the requirements for Ability-to-Benefit (ATB). Condition – During our review of student eligibility, we noted that one (1) out of sixty (60) sampled students was admitted to the College as transfer students, yet their files did not contain official transfer transcripts documenting completion of prior coursework or proof of meeting entrance requirements for the program in which they were enrolled. Despite the absence of required documentation, Title IV federal student aid was awarded and disbursed to these students. Cause –The College did not enforce its policy requiring receipt of official transfer transcripts prior to enrollment or awarding. Effect - Failure to reconcile may impact the University’s administrative capability under 34 CFR § 668.16. Title IV funds were disbursed to students without documentation of eligibility, creating questioned costs and liability for repayment to the Department of Education. Questioned Costs - $7,395 Perspective - Documentation of academic eligibility is a core compliance requirement. For transfer students, official transcripts confirm not only high school completion or recognized equivalents but also verify transfer credits and appropriate placement into programs. A 1.6% exception rate (1 out of 60 students) indicates a system-wide breakdown in Admissions/Financial Aid coordination, not an isolated oversight. Repeat Finding - Yes Auditor’s Recommendation - The University should require official transcripts prior to disbursement and strengthen record keeping controls. Management’s Response – Management has implemented standardized checklists and workflows, added secondary review, provided additional training to staff, and implemented periodic internal monitoring. View of Responsible Officials – Management agrees with the finding and acknowledges that official transfer transcripts were not consistently obtained or maintained to adequately document prior academic completion and establish Title IV eligibility in accordance with federal requirements.

Finding 2024-011 - U.S. Department of Education (Title IV Student Financial Aid Programs - Failure to Obtain Required Verification Documentation Prior to Disbursing Title IV Aid (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.53(a)(3) and 34 CFR § 668.56, when a student is selected for verification, the institution must collect and review the required verification documentation before disbursing Title IV funds, unless the student qualifies for a permitted interim disbursement or other regulatory exception. Additionally, under 34 CFR § 668.16(f), the institution must develop and apply an adequate system to identify and resolve discrepancies in information that would affect a student’s Title IV eligibility. Condition – During testing of sixty (60) students, six (6) students were identified as having been selected for verification. Of the six (6) students subject to verification, one (1) student did not have the required verification documentation in the student file; however, Title IV funds were disbursed on the student’s behalf. As a result, the University disbursed Title IV funds without documentation demonstrating that the student’s eligibility had been verified in accordance with federal requirements. Subsequent to audit inquiry, the University provided verification documentation dated after the initial disbursement and after the exception was identified during audit procedures. Cause – The exception appears to have occurred due to breakdowns in the verification tracking process and insufficient review procedures to prevent packaging and disbursement prior to completing verification. Effect – As a result, the University awarded and disbursed Title IV funds to a student whose eligibility was not properly verified. This creates a risk of improper payment and may result in questioned costs for the Title IV funds disbursed to the student. Questioned Costs - $0 Perspective - Verification is a key Title IV eligibility control designed to ensure that federal aid is awarded based on accurate and supported student information. In this instance, one (1) out of six (6) students selected for verification (16.7%), or one (1) out of sixty (60) students tested overall (1.7%), did not have the required documentation on file prior to disbursement. Although the exception was limited to one student, the error indicates that controls over the University’s verification process did not operate effectively for all students selected for verification. While the University subsequently provided verification documentation, the documentation was obtained after disbursement and after audit procedures were performed, indicating that controls over the verification process did not operate effectively at the tie Title V funds were awarded. Repeat Finding - No Auditor’s Recommendation - The University should implement a verification checklist and tracking system, strengthen internal controls, and perform periodic file audits. Management’s Response – Management has implemented standardized checklists and workflows, added secondary review, provided additional training to staff, and implemented periodic internal monitoring. View of Responsible Officials – Management agrees with the finding and acknowledges that required verification documentation was not consistently obtained and documented prior to the disbursement of Title IV federal student aid for students selected for verification.

Finding 2024-012 - U.S. Department of Education (Title IV Student Financial Aid Programs - Early Disbursement of Pell Grant Funds (material weakness) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.164 (b)(1), institutions may disburse Title IV funds no earlier than 10 days before first day of classes of a payment period. Per 34 CFR § 668.164 (a), a disbursement occurs when the institution credits a student’s account with title IV funds or pays the student directly. Posting Pell funds more than 10 days before the start date violates federal disbursement timing rules. Condition – During our review of Pell Grant disbursements, we identified that the University drew down and credited Pell Grant funds to student accounts more than 10 days prior to the start of the payment period. Specifically, twenty-nine (29) out of sixty (60) students tested had Pell funds credited 12 days before the payment period start date, and four (4) out of sixty (60) students tested had Pell funds credited 11 days before the payment period start date. As a result, Title IV funds were posted to student ledgers before students became eligible to receive the disbursements under federal disbursement timing requirements. Cause – The exception appears to have resulted from incorrect or premature disbursement dates, lack of coordination between Financial Aid and the Business Office regarding the approved disbursement calendar and insufficient controls. Effect – Pell funds being disbursed earlier than allowed may impact the University’s administrative capability under 34 CFR § 668.16, increasing risk of funds being provided to students who may never begin attendance, improper cash management and potential liabilities or repayment of funds. Questioned Costs - $0 Perspective – A failure rate of 33 out of 60 students (55%) represents a significant and systemic breakdown in the University’s Title IV disbursement controls. This is not an isolated occurrence as it indicates that more than half of all students tested received Pell disbursements earlier than permitted. Such a high exception rate suggests that the University’s disbursement schedule, system configuration, and internal oversight processes are not functioning as required, and that the issue is likely affecting all Title IV disbursements, not just the students sampled. Repeat Finding - No Auditor’s Recommendation - The University should review and correct disbursement calendars, strengthen system controls, and monitor disbursements regularly. Management’s Response – Management agrees with the finding and acknowledges that Pell Grant funds were disbursed earlier than permitted under federal Title IV disbursement timing requirements due to a miscalculation of the days. View of Responsible Officials – Management will implement a standardized calendar of disbursement dates annually based on the academic calendar.

Finding 2024-013 - U.S. Department of Education (Title IV Student Financial Aid Programs - Inaccurate Enrollment Reporting to the National Student Loan Data System (NSLDS) (material weakness) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 685.309(b) and 34 CFR § 690.83, institutions are required to report accurate and timely student enrollment information to National Student Loan Data System (NSLDS). The enrollment information must reflect each student’s current enrollment status and must be submitted within 60 days of any change in student status or in accordance with the schedule established by the U.S. Department of Education. Condition – During testing of enrollment reporting, we noted that one (1) out of six (6) sampled students had inaccurate enrollment information reported to the National Student Loan Data System (NSLDS). Enrollment status for the student was not updated correctly or timely in accordance with federal reporting requirements. Cause – It appears that the exception occurred because the University did not have adequate monitoring procedures in place to ensure compliance for updating and reconciling enrollment changes between the registrar’s system and the NSLDS submission system. Effect - Failure to accurately and timely report student enrollment statuses can result in incorrect loan deferment or grace period tracking for affected borrowers, potential early loan repayment obligations for students who are no longer enrolled, and findings in federal program reviews or compliance audits. There are also an increased risk of administrative capability concerns under 34 CFR § 668.16. Questioned Costs - $0 Perspective – Accurate enrollment reporting is critical because it directly affects borrowers’ repayment obligations and loan servicing timelines. Although only 1 of 6 students tested had an inaccurate record, this represents a material process weakness due to the high sensitivity and federal reliance on accurate enrollment data. The Department of Education treats even single enrollment reporting failures as significant because they disproportionately impact borrower rights and federal loan servicing. Repeat Finding - No Auditor’s Recommendation - The University should establish a formal reconciliation process to verify all student status changes are reported timely as well as conduct periodic reviews to ensure the accuracy of student status data. Management’s Response – Management has added secondary review and implemented periodic internal monitoring. View of Responsible Officials – Management agrees with the finding and acknowledges that student enrollment information was not consistently reported accurately and timely to NSLDS in accordance with federal reporting requirements.

Finding 2024-014 - U.S. Department of Education (Title IV Student Financial Aid Programs - Inaccurate Recipient Counts Reported on the FISAP (material weakness) Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.14 (b)(19) – Program Participation Agreement (PPA), institutions must accurately report to the Secretary information that the Secretary requires for participation in any Title IV, HEA program. Per 34 CFR § 690.83 (a), institutions must report annually to the Secretary the total number of students receiving Pell Grants and the distribution of those recipients by income category and ensure the report is complete and accurate. Inaccurate reporting violates federal reporting requirements and the institution’s Program Participation Agreement (PPA). Condition – During testing of the Fiscal Operations Report and Application to Participate (FISAP), we compared the number of recipients reported in selected income categories to the income information contained in the ISIRs reviewed. We found that the counts reported on the FISAP did not match the ISIR data, resulting in inaccurate reporting of Pell Grant recipients across certain income ranges. Cause – The inaccuracies appear to have resulted from failure to reconcile ISIR income information to the summary totals reported on the FISAP, use of incorrect or incomplete datasets when preparing recipient counts, and insufficient supervisory review over the FISAP reporting process. Effect - The Department of Education may receive incorrect statistical and demographic reporting used for policymaking and funding formulas, the University is not in compliance with federal reporting requirements and its Program Participation Agreement, and there are also an increased risk of administrative capability concerns under 34 CFR § 668.16. Questioned Costs - $0 Perspective – Accurate reporting of Pell Grant recipients by income category is essential because ED uses these data for national policy purposes, campus-based funding allocations, and program monitoring. Discrepancies between FISAP reported totals and ISIR data indicate a systemic reporting weakness, rather than a clerical oversight, and demonstrate the need for stronger data validation and reconciliation procedures. Repeat Finding - No Auditor’s Recommendation - The University should strengthen review and approval controls and improve data validation processes by ensuring that datasets used for FISAP preparation are complete, consistent, and aligned with financial aid records. Management’s Response – Management has added secondary review, implemented periodic internal monitoring, and added system configuration limitations. View of Responsible Officials – Management agrees with the finding and acknowledges that recipient counts reported on the FISAP were not consistently accurate in accordance with federal reporting requirements.

Finding 2024-015 - U.S. Department of Education (USDJ, Title IV Student Financial Aid Programs - Inconsistencies Between Award Letters and Actual Title IV Disbursements (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 668.165 (a), institutions must notify a student or parent of a PLUS borrower, of the amount and type of Title IV funds the student will receive and ensure the information provided is accurate and consistent with actual disbursements. Condition – During testing of student financial aid records, we identified that thirteen (13) out of sixty (60) students had inconsistencies between the Title IV award amounts listed on their financial aid award letters and the amounts actually disbursed to their student account statements. Differences included Pell Grant, Direct Loan, and campus-based aid amounts that did not match the final disbursements reflected in the University’s student account system. Cause – The inconsistencies appear to have resulted from failure to update award letters. Effect – Students received incorrect or misleading information about their financial aid eligibility. Discrepancies can result in over awards or under awards of Title IV funds, improper loan disbursements and the University is not meeting administrative capability requirements under 34 CFR § 668.18. Questioned Costs - $0 Perspective – A discrepancy rate of 13 out of 60 students (21.7%) indicates a systemic issue, not isolated clerical errors. Because award letters are the official communication of eligibility and expected aid, inconsistencies undermine transparency, violate federal notification requirements, and reflect weaknesses in the University’s internal controls over awarding and disbursement. Repeat Finding - No Auditor’s Recommendation - The University should implement monthly reconciliations, strengthen cross-department coordination, perform year-end reconciliation prior to FISAP submission. Implementation of these measures will help ensure compliance with federal regulations, reduce financial reporting risk, and reinforce the University’s administrative capability. Management’s Response – Management has added secondary review, implemented periodic internal monitoring, and enhanced system controls within the financial aid software. View of Responsible Officials – Management agrees with the finding and acknowledges that discrepancies occurred between information reflected on award letters and actual Title IV disbursements, resulting in inconsistent communication of federal aid information to students and parents.

Finding 2024-016 - U.S. Department of Education (Title IV Student Financial Aid Programs - Pell Grant Disbursed Without Meeting Summer Eligibility Requirements (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per HEA 401 (c), A Pell Grant may be awarded for additional terms within the same award year only if the student is enrolled at least half-time and is eligible for payment for additional coursework beyond the student’s annual award amount. Institutions must ensure the student meets all summer Pell eligibility criteria before disbursing additional Pell funds. Condition – During testing of Pell Grant disbursements, we identified that one (1) out of sixty (60) students received a summer Pell Grant even though the student did not meet the federal eligibility criteria for a summer disbursement under Year-Round Pell provisions. The student did not meet the required enrollment or acceleration requirements but was nevertheless awarded and disbursed Pell funds for the summer term. Cause – The exception occurred due to lack of review to confirm Pell eligibility before awarding funds, and misinterpretation or misapplication of year-round Pell rules. Effect - The University disbursed Pell funds to a student who did not qualify, resulting in $793.00 in questioned costs. Disbursing Pell funds without verifying eligibility places the University out of compliance with federal requirements. Improper Pell disbursements may lead to required fund repayment, program review findings, and administrative capability concerns under 34 CFR § 668.16. Questioned Costs - $793 Perspective – Although this exception occurred for only one student, summer Pell awarding errors are treated seriously because they involve strict eligibility criteria and Year-Round Pell provisions, which are closely monitored by the Department of Education. Even a single error indicates a potential weakness in the school’s summer awarding review process and a need for stronger eligibility verification controls. Repeat Finding - No Auditor’s Recommendation - The University should update and strengthen its Pell Grant awarding and review procedures to align with current Pell Grant regulations and enrollmentintensity– based awarding requirements. The University should also enhance supervisory review for summer awarding. Management’s Response – Management has added secondary review, implemented periodic internal monitoring, and conducted targeted staff training tied to updated procedures. View of Responsible Officials – Management agrees with the finding and acknowledges that Pell Grant funds were disbursed for summer enrollment without consistently ensuring and documenting that all federal summer eligibility requirements were met prior to disbursement.

Finding 2024-017 - U.S. Department of Education (Title IV Student Financial Aid Programs - Direct Subsidized Loan Overpayment (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2024; Federal Pell Grant Program, FAL No. 84. 063, June 30, 2024; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2024; Federal Work-Study Program, FAL No. 84.033, June 30, 2024. Criteria – Per 34 CFR § 685.303 (g), institutions must ensure that the loan originated and disbursed does not exceed the student’s loan eligibility under annual and aggregate loan limits. Loans may not exceed limits established under annual subsidized loan limits, grade level progression, and cost of attendance minus estimated financial assistance (EFA). Institutions must adjust or cancel excess amounts before disbursement. Condition – During testing of Direct Loan disbursements, we identified that one (1) out of sixty (60) students received a Direct Subsidized Loan disbursement in excess of the federally allowable amount. The loan amount posted to the student’s account exceeded the maximum subsidized loan eligibility based on the student’s grade level, dependency status, and annual loan limits. Cause – The overpayment appears to have resulted from failure to properly verify the student’s annual loan limit. Effect – The student received a subsidized loan in excess of allowable federal limits, resulting in an improper disbursement. The overpayment represents a liability to the University, which may be required to return the excess loan amount to COD. Questioned Costs - $1703 Perspective – Although the exception was found in only one student, Direct Loan over awards are considered high-risk violations, as they reflect weaknesses in awarding logic and system configuration. Even a single overpayment indicates a need to review processes for determining loan limits, grade level progression, and system controls. Repeat Finding - No Auditor’s Recommendation - The University should verify loan eligibility prior to disbursement, review grade level and program progression controls, and strengthen system controls. Management’s Response – Management has added secondary review, implemented periodic internal monitoring, and conducted targeted staff training tied to updated procedures. View of Responsible Officials – Management agrees with the finding and acknowledges that Direct Subsidized Loan amounts were not consistently adjusted to remain within the student's allowable federal loan eligibility limits prior to disbursement.

Finding 2023-002 - U.S. Department of Education (USD), Title IV Student Financial Aid Programs (material weakness): Information on the federal program: Federal Direct Student Loans, FAL No. 84.268, June 30, 2023; Federal Pell Grant Program, FAL No. 84.063, June 30, 2023; Federal Supplemental Educational Opportunity Grant, FAL No. 84.007, June 30, 2023; Federal Work-Study Program, FAL No. 84.033, June 30, 2023. Criteria - Federal regulations governing Title IV programs. Condition - Instances of noncompliance were noted as more fully described in the context below. Questioned Costs - $88,024 Context - We observed the following conditions in connection with our testing of the various U.S. Department of Education, Title IV, Student Financial Assistance Programs: 1) The College did not reconcile the following programs between the Office of Financial Aid and the Business Office. Per 34 CFR 685.300(b)(5). a. Federal Pell Grant Program b. Federal Direct Student Loans c. Federal SEOG 2) The Office of Financial Aid submitted unreconciled expenditures within the Fiscal Operations Report and Application to Participate (FISAP) for the programs below: a. Federal Pell Grant Program b. Federal Work Study (FWS) Program 3) One (1) out of 6 students tested for withdrawals and the return of Title IV funds did not have their Title IV program funds returned within the 45-day requirement. HEA, Section 484B & 34 CFR 668.22. 4) One (1) out of 60 students had a credit balance on their account created by Title IV program funds longer than 14 days. 34 CFR 668.164(h)(1). 5) One (1) out of 60 students tested did not make satisfactory academic progress (SAP) for the academic year. The College did not provide supporting documentation for successful appeals and allowed the students to receive Title IV funding. 34 CFR 668.34. Questioned cost for this finding is: $6,198. 6) Five (5) out of 60 students tested did not have high school/GED to prove eligibility for the program they were enrolled within the College. HEA Section 484(d) and 34 CFR 668.32. Questioned cost for this finding is $41,443. 7) Four (4) out of 60 students tested were accepted as transfer students but did not have official (transfer) transcripts to prove eligibility for the program they were enrolled within the College. HEA Section 484(d) and 34 CFR 668.32. Questioned cost for this finding is $40,383. Cause – Oversight by responsible employees of properly monitoring regulatory requirements. Effect – The College’s participation in the Title IV programs could be subject to USDE sanctions as applicable. Repeat Finding – Yes. Auditor’s Recommendation –The College should implement corrective actions to ensure that the above findings are resolved and do not recur in future periods. Moreover, internal controls over compliance with federal program regulations should be revisited to ensure adequate supervisory controls, quality assurance reviews of processes, and policies and procedures are being updated and adhered to for compliance purposes. View of Responsible Officials – Philander Smith College concurs with this finding, and the following action has been taken. Philander Smith University has improved the efficiency of reconciling between the Financial Aid Office and COD by standardizing procedures. Staff have been cross trained to reduce processing delays. Financial Aid staff will coordinate with Business Office staff for notification after the Financial Aid to COD reconciliation is complete. Additionally, Financial Aid Office staff will receive additional training on areas where findings were identified. Philander Smith University is actively working to fill vacancies in the Business Office.

Finding 2022-002 ? Federal Pell Grant, Federal Direct Student Loans ? Federal Student Financial Aid Cluster, CFDA# 84.063, 84.268 Compliance Requirement: Special Tests ? Enrollment Reporting Condition: Student status changes were not reported to the National Student Loan Data System (?NSLDS?) in a timely manner or were not accurately reported. Criteria: Under the Pell grant and ED loan programs, institutions must complete and return within 15 days the Enrollment Reporting roster file [formerly the Student Status Confirmation Report (SSCR)] placed in their Student Aid Internet Gateway (SAIG) (OMB No. 1845-0002) mailboxes sent by ED via NSLDS (OMB No. 1845-0035). The institution determines how often it receives the Enrollment Reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the NSLDS website (FPL, 34 CFR Section 674.19; Pell, 34 CFR Section 690.83(b)(2); FFEL, 34 CFR Section 682.610; Direct Loan, 34 CFR Section 685.309). Enrollment Reporting in a timely and accurate manner is critical for effective management of the programs. Enrollment information must be reported within 30 days whenever attendance changes for students, unless a roster will be submitted within 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence. Cause: The College?s internal controls and processes in place surrounding enrollment reporting need to be strengthened. Context: Out of a population of 20 withdrawn and 146 graduated students, a population of two withdrawn students and the 15 graduated students were selected for testing. The College failed to communicate to NSLDS a change of status in a timely manner in 1 instance and reported 6 students as withdrawn that should have been reported as graduated students. Effect: Changes in enrollment status were not reported timely and accurately. Repeat Finding: This finding was a repeat of Finding 2021-003 in the immediate prior audit. Recommendation: The College should continue to review its processes and procedures over enrollment reporting and implement internal controls over compliance that prevent and detect both a lack of communication of withdrawal changes and an improper communication of enrollment status and effective dates. The College should conduct a retrospective review of its Enrollment Reporting Summary Report (SCHER1) file on the NSLDS website and compare to the Registrar?s records to ensure that previously communicated status changes (and status changes that have not been communicated) are correctly communicated to the Department of Education. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2022-003 ? Federal Direct Student Loan ? Federal Student Financial Aid Cluster, CFDA# 84.268 Compliance Requirement: Reporting, Special Tests ? Borrower Data Transmission and Reconciliation Condition: Documentation to support the College?s reconciliation between the School Account Statement (?SAS?) data file and the College?s financial records were performed was not available. Criteria: Each month, the COD provides institutions with a SAS data file which consists of a Cash Summary, Cash Detail, and (optional at the request of the school) Loan Detail records. The school is required to reconcile these files to the Institution?s financial records. Cause: The College?s internal controls and processes in place surrounding borrower data transmission and reconciliations of the SAS data file need to be strengthened. Context: Two monthly reconciliations were selected for testing and documentation to support that the reconciliation was performed was not available. Effect: Incorrect disbursement dates could be reported to COD. Repeat Finding: This finding was a repeat of Finding 2021-004 in the immediate prior audit. Recommendation: The College should maintain documentation evidencing the reconciliation between the SAS data file and the College?s financial records. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2021-003 ? Federal Pell Grant, Federal Direct Student Loans ? Federal Student Financial Aid Cluster, CFDA# 84.063, 84.268 Compliance Requirement: Special Tests ? Enrollment Reporting Condition: Student status changes were not reported to the National Student Loan Data System ("NSLDS") in a timely manner or were not accurately reported. Criteria: Under the Pell grant and ED loan programs, institutions must complete and return within 15 days the Enrollment Reporting roster file [formerly the Student Status Confirmation Report (SSCR)] placed in their Student Aid Internet Gateway (SAIG) (OMB No. 1845-0002) mailboxes sent by ED via NSLDS (OMB No. 1845-0035). The institution determines how often it receives the Enrollment Reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the NSLDS website (FPL, 34 CFR Section 674.19; Pell, 34 CFR Section 690.83(b)(2); FFEL, 34 CFR Section 682.610; Direct Loan, 34 CFR Section 685.309). Enrollment Reporting in a timely and accurate manner is critical for effective management of the programs. Enrollment information must be reported within 30 days whenever attendance changes for students, unless a roster will be submitted within 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence. Cause: The College's internal controls and processes in place surrounding enrollment reporting need to be strengthened. Context: Out of a population of 20 withdrawn and 146 graduated students, a population of two withdrawn students and the 15 graduated students were selected for testing. The College failed to communicate to NSLDS a change of status in a timely manner in 1 instance and reported 6 students as withdrawn that should have been reported as graduated students. Effect: Changes in enrollment status were not reported timely and accurately. Repeat Finding: This finding was a repeat of Finding 2020-004 in the immediate prior audit. Recommendation: The College should continue to review its processes and procedures over enrollment reporting and implement internal controls over compliance that prevent and detect both a lack of communication of withdrawal changes and an improper communication of enrollment status and effective dates. The College should conduct a retrospective review of its Enrollment Reporting Summary Report (SCHER1) file on the NSLDS website and compare to the Registrar?s records to ensure that previously communicated status changes (and status changes that have not been communicated) are correctly communicated to the Department of Education. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management's corrective action plan.

Finding 2021-004 ? Federal Direct Student Loan ? Federal Student Financial Aid Cluster, CFDA# 84.268 Compliance Requirement: Reporting, Special Tests ? Borrower Data Transmission and Reconciliation Condition: Documentation to support the College?s reconciliation between the SAS data file and the College's financial records were performed was not available. Criteria: Each month, the COD provides institutions with a School Account Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional at the request of the school) Loan Detail records. The school is required to reconcile these files to the institution's financial records. Cause: The College's internal controls and processes in place surrounding borrower data transmission and reconciliations of the SAS data file need to be strengthened. Context: Two monthly reconciliations were selected for testing and documentation to support that the reconciliation was performed was not available. Effect: Incorrect disbursement dates could be reported to COD. Repeat Finding: This finding was a repeat of Finding 2020-005 in the immediate prior audit. Recommendation: The College should maintain documentation evidencing the reconciliation between the SAS data file and the College's financial records. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2021-005? Perkins Loan Program, CFDA# 84.038 Compliance Requirement: Special Tests ? Federal Perkins Loan Liquidation Criteria: Institution that have decided to stop participating in the Federal Perkins Loan Program are responsible for returning any unspent funds (34 CFR Section 668.14(b)(25)). The institution must perform the end-of-participation procedures in which it must (a) notify ED of the intent to stop participating in Perkins (34 CFR Section 668.26(b)(1)); (b) inform ED of how the institution will provide for the collection of any outstanding loans made under the program (34 CFR Section 668.26(b)(4)); (c) purchase any outstanding loans left in its Perkins portfolios or assign them to ED (34 CFR Sections 674.8(d), 674.17(a)(2), and 674.45(d)(2)); and (d) maintain program and fiscal records of all Perkins funds since the most recent Fiscal Operations Report (FISAP) was submitted, and reconcile this information at least monthly (34 CFR Section 674.19(d)). Condition: The College began the liquidation process in 2006 and had not completed the following steps: (1) assign the remaining loans with outstanding balances to ED for collection, (2) inform servicers involved in billing or collection activities to return outstanding accounts to the College, (3) submit a completed Perkins Assignment Form with each outstanding Perkins Loan, and (4) reconcile any discrepancies between what the College reports and what the Department of Education has on file. Cause: The assigning of loans process to ED and the Perkins Loan Program has been in a state of pause/standstill for multiple years due to lack of clear direction and resources to complete the liquidation process. Context: The gross Perkins loan receivable balance at June 30, 2021 is $371,657. Effect: The College is not currently performing reconciliations, has not completed the submission for assignment of all potential loans still outstanding to ED, and has not completed any of the other required procedures to complete its Perkins Loan Program liquidation process. Repeat Finding: This finding was a repeat of Finding 2020-006 in the immediate prior audit. Recommendation: We recommend the College finalize the Perkins Loan Program liquidation process. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2021-006 - Federal Pell Grant, Federal Work Study Program, Federal Supplemental Educational Opportunities Grants, Federal Direct Student Loans ? Federal Student Financial Aid Cluster, CFDA# 84.063, 84.033, 84.007, 84.268 Compliance Requirement: Gramm-Leach-Bliley Act Condition: The College has not performed its risk assessment as of June 30, 2021. Criteria: The College is required to complete a risk assessment that addresses the three required areas noted in 16 CFR 314.4 (b). Cause: The College has not begun the process of performing its risk assessment as required under the Uniform Grant Guidance. Context: The College is required to perform this risk assessment, document risks and document safeguards to protect against those risks. Effect: The College could have risks associated with the safeguarding of sensitive information it is not aware of or does not protect against. Repeat Finding: This finding was a repeat of Finding 2020-007 in the immediate prior audit. Recommendation: The College should complete its risk assessment and document any risks identified and safeguards put in place to protect against such risk as soon as possible. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2021-007 - CARES Act: Higher Education Emergency Relief Fund (HEERF) ? CFDA# 84.425 Compliance Requirement: Reporting Condition: The College could not provide documentation to support its public posting of completed forms for the Institutional and Student Portions of HEERF on the College's website for the year ended June 30, 2021. Criteria: The CARES, CRRSAA, and ARP institutional and student portions quarterly reporting requirements involve publicly posting completed forms on the institution's website. The forms must be conspicuously posted on the institution's primary website and must be posted on the same page of the Institution's website. Cause: The College could not provide documentation to support its public posting of completed forms. Context: The College is required to post information on its CARES, CRRSAA, and ARP grant awards and expenditures on its website on a quarterly basis. Effect: The College is not incompliance with the reporting requirement of the CARES, CRRSAA, and ARP grants. Recommendation: The College should maintain document to evidence its compliance with the quarterly public posting requirements under the CARES, CRRSAA, and ARP grants. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2021-008 - CARES Act: Higher Education Emergency Relief Fund ? CFDA# 84.425 Compliance Requirement: Allowable Costs Condition: The College improperly computed HEERF lost revenues for the year ended June 30, 2021. Criteria: Lost revenue is defined as "those revenues an institution of higher education (institution) otherwise expected but were reduced or eliminated as a result of the novel coronavirus 2019 (COVID-19) pandemic" and should not include any HEERF or other COVID relief funding. Cause: The College incorrectly included HEERF funding utilized to provide institutional aid to students in its computation of lost revenues. Context: The College has requested and drawn down approximately $818,000 in excess of its revised lost revenue computation. Effect: This excess reimbursement may be disallowed. Recommendation: The College should review the lost revenue guidance issued by the Department of Education and ensure that it is in compliance with that guidance, including compliance with the quarterly public posting requirements under the CARES, CRRSAA, and ARP grants. This guidance issued by the Department of Education also requires the College to adequately document its estimate of lost revenue, including its rationale, calculations, methodology, underlying data, and budgets or projections used to determine the amount of lost revenue and retain financial records, supporting documents, statistical records, and all other institutional records pertinent to lost revenue and the administration of the HEERF grant programs generally for a period of three years from the date of submission of the final expenditure report (2 CFR ? 200.334). Management Response: The College concurs with this finding. Corrective Action Plan: See attached management's corrective action plan.

2020-004 ? Federal Pell Grant, Federal Direct Student Loans ? Federal Student Financial Aid Cluster, CFDA# 84.063, 84.268 Compliance Requirement: Special Tests ? Enrollment Reporting Condition: Student status changes were not reported to the National Student Loan Data System (?NSLDS?) in a timely manner or were not accurately reported. Criteria: Under the Pell grant and ED loan programs, institutions must complete and return within 15 days the Enrollment Reporting roster file [formerly the Student Status Confirmation Report (SSCR)] placed in their Student Aid Internet Gateway (SAIG) (OMB No. 1845-0002) mailboxes sent by ED via NSLDS (OMB No.1845-0035). The institution determines how often it receives the Enrollment Reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the NSLDS website (FPL, 34 CFR Section 674.19; Pell, 34 CFR Section 690.83(b)(2); FFEL, 34 CFR Section 682.610; Direct Loan, 34 CFR Section 685.309). Enrollment Reporting in a timely and accurate manner is critical for effective management of the programs. Enrollment information must be reported within 30 days whenever attendance changes for students, unless a roster will be submitted within 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence. Cause: The College?s internal controls and processes in place surrounding enrollment reporting need to be strengthened. Context: Out of a population of 34 withdrawn and 120 graduated students, a population of three withdrawn students and the 12 graduated students were selected for testing. The College failed to communicate to NSLDS a change of status in a timely manner in 2 instances, reported 4 students as graduated that should have been reported as withdrawn students and there was no documentation to verify information submitted for one student. Effect: Changes in enrollment status were not reported timely and accurately. Repeat Finding: This finding was a repeat of Finding 2019-004 in the immediate prior audit. Recommendation: The College should continue to review its processes and procedures over enrollment reporting and implement internal controls over compliance that prevent and detect both a lack of communication of withdrawal changes and an improper communication of enrollment status and effective dates. The College should conduct a retrospective review of its Enrollment Reporting Summary Report (SCHER1) file on the NSLDS website and compare to the Registrar?s records to ensure that previously communicated status changes (and status changes that have not been communicated) are correctly communicated to the Department of Education. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2020-005 ? Federal Direct Student Loan ? Federal Student Financial Aid Cluster, CFDA# 84.268 Compliance Requirement: Reporting, Special Tests ? Borrower Data Transmission and Reconciliation Condition: Disbursement dates for Direct Loan awards did not match between the Common Origination and Disbursement (?COD?) and the College?s records. Documentation to support the College?s reconciliation between the SAS data file and the College?s financial records were performed was not available. Criteria: Institutions must report all loan disbursements and submit required records to the Direct Loan Servicing System (DLSS) via the COD within 15 days of disbursement (OMB No. 1845-0021). Each month, the COD provides institutions with a School Account Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional at the request of the school) Loan Detail records. The school is required to reconcile these files to the institution?s financial records. Cause: The College?s internal controls and processes in place surrounding borrower data transmission and reconciliations of the SAS data file need to be strengthened. Context: Out of a population of 999 students who received student financial aid during the year, a sample of 40 students was selected for testing. The disbursement dates did not match between COD and the College?s records on 2 of the students tested. Also in the sample of 40 were 15 first-time borrowers entering their first year of undergraduate. 7 out of 15 of these first-time borrowers received the first installment of their loan proceeds before 30 days after the program began. In addition, two monthly reconciliations were selected for testing and documentation to support that the reconciliation was performed was not available. Effect: Incorrect disbursement dates were reported to COD. Repeat Finding: This finding was a repeat of Finding 2019-005 in the immediate prior audit. Recommendation: The College should design and implement internal controls to ensure that disbursements are properly recorded in the College?s business office records and then subsequently reported correctly to COD in a timely manner. The College should maintain documentation evidencing the reconciliation between the SAS data file and the College?s financial records. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2020-006? Perkins Loan Program, CFDA# 84.038 Compliance Requirement: Special Tests ? Federal Perkins Loan Liquidation Criteria: Institution that have decided to stop participating in the Federal Perkins Loan Program are responsible for returning any unspent funds (34 CFR Section 668.14(b)(25)). The institution must perform the end-of participation procedures in which it must (a) notify ED of the intent to stop participating in Perkins (34 CFR Section 668.26(b)(1)); (b) inform ED of how the institution will provide for the collection of any outstanding loans made under the program (34 CFR Section 668.26(b)(4)); (c) purchase any outstanding loans left in its Perkins portfolios or assign them to ED (34 CFR Sections 674.8(d), 674.17(a)(2), and 674.45(d)(2)); and (d) maintain program and fiscal records of all Perkins funds since the most recent Fiscal Operations Report (FISAP) was submitted, and reconcile this information at least monthly (34 CFR Section 674.19(d)). Condition: The College began the liquidation process in 2006 and had not completed the following steps: (1) assign the remaining loans with outstanding balances to ED for collection, (2) inform servicers involved in billing or collection activities to return outstanding accounts to the College, (3) submit a completed Perkins Assignment Form with each outstanding Perkins Loan, and (4) reconcile any discrepancies between what the College reports and what the Department of Education has on file. Cause: The assigning of loans process to ED and the Perkins Loan Program has been in a state of pause/standstill for multiple years due to lack of clear direction and resources to complete the liquidation process. Context: The gross Perkins loan receivable balance at June 30, 2020 is $371,657. Effect: The College is not currently performing reconciliations, has not completed the submission for assignment of all potential loans still outstanding to ED, and has not completed any of the other required procedures to complete its Perkins Loan Program liquidation process. Repeat Finding: This finding was a repeat of Finding 2019-007 in the immediate prior audit. Recommendation: We recommend the College finalize the Perkins Loan Program liquidation process. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2020-007 - Federal Pell Grant, Federal Work Study Program, Federal Supplemental Educational Opportunities Grants, Federal Direct Student Loans ? Federal Student Financial Aid Cluster, CFDA# 84.063, 84.033, 84.007, 84.268 Compliance Requirement: Gramm-Leach-Bliley Act Condition: The College has not performed its risk assessment as of June 30, 2020. Criteria: The College is required to complete a risk assessment that addresses the three required areas noted in 16 CFR 314.4 (b). Cause: The College has not begun the process of performing its risk assessment as required under the Uniform Grant Guidance. Context: The College is required to perform this risk assessment, document risks and document safeguards to protect against those risks. Effect: The College could have risks associated with the safeguarding of sensitive information it is not aware of or does not protect against. Repeat Finding: This finding was a repeat of Finding 2019-008 in the immediate prior audit. Recommendation: The College should complete its risk assessment and document any risks identified and safeguards put in place to protect against such risk as soon as possible. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Finding 2020-008 ? Higher Educational Institutional Aid, CFDA No. 84.031 Compliance Requirement: Equipment and Real Property Management Condition: The College does not have documentation to evidence that a physical inventory of equipment and other property acquired with federal funds was performed in the past two years. Criteria: The College is required to complete a physical inventory at least once every two years of property acquired in part or in full with federal funds as noted in 2 CFR 200.313 (d) (2) Cause: The College has asserted that the physical inventory was performed during the year ended June 30,2018, however, documentation of that physical inventory could not be located. Context: The College is required to perform this physical inventory to ensure adequate safeguards are in place to prevent loss, damage, or theft of property acquired with federal funds. Effect: The College could have risks associated with the safeguarding of equipment and/or other property acquired with federal funds. Repeat Finding: This finding was a repeat of Finding 2019-009 in the immediate prior audit. Recommendation: The College should complete, as soon as practically feasible, a physical inventory of equipment and other assets acquired in part or in full with federal funds. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Compliance Requirement: Special Tests ? Enrollment Reporting Condition: Student status changes were not reported to the NSLDS in a timely manner or were not accurately reported. Criteria: Under the Pell grant and ED loan programs, institutions must complete and return within 15 days the Enrollment Reporting roster file [formerly the Student Status Confirmation Report (SSCR)] placed in their Student Aid Internet Gateway (SAIG) (OMB No. 1845-0002) mailboxes sent by ED via National Student Loan Data System (?NSLDS?) (OMB No. 1845-0035). The institution determines how often it receives the Enrollment Reporting roster file with the default set at a minimum of every 60 days. Once received, the institution must update for changes in student status, report the date the enrollment status was effective, enter the new anticipated completion date, and submit the changes electronically through the batch method or the NSLDS website (FPL, 34 CFR Section 674.19; Pell, 34 CFR Section 690.83(b)(2); FFEL, 34 CFR Section 682.610; Direct Loan, 34 CFR Section 685.309). Enrollment Reporting in a timely and accurate manner is critical for effective management of the programs. Enrollment information must be reported within 30 days whenever attendance changes for students, unless a roster will be submitted within 60 days. These changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves-of-absence. Cause: The College?s internal controls and processes in place surrounding enrollment reporting need to be strengthened. Context: Out of a population of 30 withdrawn and 81 graduated students, a population of three withdrawn students and the eight graduated students were selected for testing. The College failed to communicate to NSLDS a change of status in a timely manner in 6 instances and failed to accurately communicate the type of the student?s status change. Effect: Changes in enrollment status were not reported timely and accurately. Repeat Finding: This finding was a repeat of Finding 2018-002 in the immediately prior audit. Recommendation: The College should continue to review its processes and procedures over enrollment reporting and implement internal controls over compliance that prevent and detect both a lack of communication of withdrawal changes and an improper communication of enrollment status and effective dates. The College should conduct a retrospective review of its Enrollment Reporting Summary Report (SCHER1) file on the NSLDS website and compare to the Registrar?s records to ensure that previously communicated status changes (and status changes that have not been communicated) are correctly communicated to the Department of Education. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Compliance Requirement: Reporting, Special Tests ? Borrower Data Transmission and Reconciliation Condition: Disbursement dates for Direct Loan awards did not match between the Common Origination and Disbursement (?COD?) and the College?s records. Documentation to support the College?s reconciliation between the SAS data file and the College?s financial records were performed was not available. Criteria: Institutions must report all loan disbursements and submit required records to the Direct Loan Servicing System (DLSS) via the COD within 15 days of disbursement (OMB No. 1845-0021). Each month, the COD provides institutions with a School Account Statement (SAS) data file which consists of a Cash Summary, Cash Detail, and (optional at the request of the school) Loan Detail records. The school is required to reconcile these files to the institution?s financial records. Cause: The College?s internal controls and processes in place surrounding borrower data transmission and reconciliations of the SAS data file need to be strengthened. Context: Out of a population of 1,028 students who received Direct Student loans during the year, a sample of 40 students was selected for testing. The disbursement dates did not match between COD and the College?s records on 23 of the students tested. Also in the sample of 40 were 8 first-time borrowers entering their first year of undergraduate. 5 out of 8 of these first-time borrowers received the first installment of their loan proceeds before 30 days after the program began. In addition, two monthly reconciliations were selected for testing and documentation to support that the reconciliation was performed was not available. Effect: Incorrect disbursement dates were reported to COD. Repeat Finding: This finding was a repeat of Finding 2018-003 in the immediately prior audit. Recommendation: The College should design and implement internal controls to ensure that disbursements are properly recorded in the College?s business office records and then subsequently reported correctly to COD in a timely manner. The College should maintain documentation evidencing the reconciliation between the SAS data file and the College?s financial records. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Compliance Requirement: Special Tests ? Verification Criteria: An institution not participating under an ED-approved QAP is required to establish written policies and procedures that incorporate the provisions of 34 CFR sections 668.51 through 668.61 for verifying applicant information. Such an institution shall require each applicant whose application is selected by ED to verify the information required for the Verification Tracking Group to which the applicant is assigned. After completion of verification procedures, data corrections must be submitted to the central processor for recalculation of awards. Condition: In certain instances, data corrections to a student?s Institutional Student Information Reports (?ISIR?) are not submitted to the central processor for recalculation. Cause: The College does not have sufficient internal controls in place to ensure that data corrections made during the verification process and submitted to the central processor for recalculation. Context: Out of a population of 511 students selected for verification, 40 students were selected for testing to ensure that appropriate verification procedures had been performed. In six instances, the information per the College?s records did not match the information that was verified through the verification process. Effect: Improper awarding of Title IV funds could occur. Recommendation: The College should review its processes and controls in place over verification procedures. The College should design and implement internal controls that ensure that verification takes place for all selected students, all verifications are reviewed by a person independent of the preparer of the initial verification, and all data corrections to ISIRs are submitted to the central processor for correction and recalculation. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Compliance Requirement: Special Tests ? Federal Perkins Loan Liquidation Criteria: For an institution that decided to stop participating in the Federal Perkins Loan Program (Perkins) (CFDA 84.038), the institution is responsible for returning any unspent funds (34 CFR Section 668.14(b)(25)). The institution must perform the end-of-participation procedures in which it must (a) notify ED of the intent to stop participating in Perkins (34 CFR Section 668.26(b)(1)); (b) inform ED of how the institution will provide for the collection of any outstanding loans made under the program (34 CFR Section 668.26(b)(4)); (c) purchase any outstanding loans left in its Perkins portfolios or assign them to ED (34 CFR Sections 674.8(d), 674.17(a)(2), and 674.45(d)(2)); and (d) maintain program and fiscal records of all Perkins funds since the most recent Fiscal Operations Report (FISAP) was submitted, and reconcile this information at least monthly (34 CFR Section 674.19(d)). Condition: The College began the liquidation process in 2006 and had not completed the following steps: (1) assign the remaining loans with outstanding balances to the Department for collection, (2) inform servicers involved in billing or collection activities to return outstanding accounts to the College, (3) submit a completed Perkins Assignment Form with each outstanding Perkins Loan, and (4) reconcile any discrepancies between what the College reports and what the Department of Education has on file. Cause: The assigning of loans process to ED and the Perkins Loan Program has been in a state of pause/standstill for multiple years due to lack of clear direction and resources to complete the liquidation process. Context: The gross Perkins loan receivable balance at June 30, 2019 is $371,657. Effect: The College is not currently performing reconciliations, has not completed the submission for assignment of all potential loans still outstanding to ED, and has not completed any of the other required procedures to complete its Perkins Loan Program liquidation process. Repeat Finding: This finding was a repeat of Finding 2018-004 in the immediately prior audit. Recommendation: We recommend the College work expeditiously to finalize the Perkins Loan Program liquidation process. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Compliance Requirement: Gramm-Leach-Bliley Act Condition: The College has not performed its risk assessment as of June 30, 2019. Criteria: The College is required to complete a risk assessment that addresses the three required areas noted in 16 CFR 314.4 (b) Cause: The College has not begun the process of performing its risk assessment as required under the Uniform Grant Guidance. Context: The College is required to perform this risk assessment, document risks and document safeguards to protect against those risks. Effect: The College could have risks associated with the safeguarding of sensitive information it is not aware of or does not protect against. Recommendation: The College should complete its risk assessment and document any risks identified and safeguards put in place to protect against such risk as soon as possible. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Compliance Requirement: Equipment and Real Property Management Condition: The College does not have documentation to evidence that a physical inventory of equipment and other property acquired with federal funds was performed in the past two years. Criteria: The College is required to complete a physical inventory at least once every two years of property acquired in part or in full with federal funds as noted in 2 CFR 200.313 (d) (2) Cause: The College has asserted that the physical inventory was performed during the year ended June 30, 2018, however, documentation of that physical inventory could not be located. Context: The College is required to perform this physical inventory to ensure adequate safeguards are in place to prevent loss, damage or theft of property acquired with federal funds. Effect: The College could have risks associated with the safeguarding of equipment and/or other property acquired with federal funds. Recommendation: The College should complete, as soon as practically feasible, a physical inventory of equipment and other assets acquired in part or in full with federal funds. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Compliance Requirement: Procurement, suspension and debarment Condition: The College could not provide documentation to evidence that the required suspension and debarment verification was performed. Criteria: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. The non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity. Cause: Management has asserted that the verification was performed, however, management could not locate the documentation. Context: The College did not have documentation for one contract that was selected for testing. Effect: The College does not have documentation to evidence compliance with the requirement to perform the required pre-award/pre-contracting verification. Recommendation: The College should maintain in its federal contract files documentation to support that a verification check was performed prior to entering into any contract or subaward to evidence its verification that the contracting party was not suspended or debarred from federal procurements. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

Compliance Requirement: Procurement, suspension and debarment Condition: The College could not provide documentation to support the procurement of a purchase as defined under the federal guidelines. Criteria: In accordance with 2 CFR 215.46, Procurement Records, procurement records and files for purchases in excess of the small purchase threshold ($25,000) shall include the following at a minimum: (a) basis for contractor selection; (b) justification for lack of competition when competitive bids or offers are not obtained; and (c) basis for award cost or price. Cause: The documentation was not maintained because the project had multiple elements and management did not identify that the total project was in excess of $25,000 and therefore met the procurement records requirement. Context: The College did not have documentation to support the basis for contractor selection, lack of competitive bid and basis for project price for one out of four purchases selected for testing. Effect: The College does not have documentation to evidence compliance with the procurement record keeping requirement. Recommendation: The College should review its procurement procedures and determine what steps need to be revised or strengthened to ensure that procurement records for purchases in excess of the small purchase threshold included the required documentation; also being mindful to look specifically for purchases that may have multiple elements or subprojects. Management Response: The College concurs with this finding. Corrective Action Plan: See attached management?s corrective action plan.

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